• Sat. Jun 15th, 2024

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How to Trade cryptocurrency

Introduction

This is the era of new beginnings, and you are probably one of the first few people in your social group to think out of the box.

It certainly comes with the risk of the unknown, but history has taught us one thing, money and power come to those who take a big risk, so below, you will understand how to trade cryptocurrency.

Crypto Trading types

There are two types of crypto trading:

  1. Fiat to Crypto from Fiat:

In this type, fiat (USD {USDT}, GBP {GBP}, SGD {SGT}, INR {INR}) is the base currency, and you trade it against cryptocurrencies like bitcoin, Ethereum and others.  The goal here is to increase your fiat money and keep booking profits regularly.

  1. Crypto to Crypto trading: (AltCoin Trading)

It is by far the least understood and most profitable form of crypto trading.  In this type, you use crypto as the base and trade against other cryptocurrencies (altcoins) to develop the base coin.

It is also popularly known as altcoin trading.  At the time of the bull market, it is one of the best ways to increase your bitcoin holding.

Many beginners stick to crypto trading with Fiat, as it seems easy and familiar. However, another league that is using Crypto for Crypto Trading makes significant gains over time.

Short Term Trading

Short-term trading is buying a cryptocurrency for a short time, such as a day, week, or month to make a profit. Many people get involved in day trading, buying and selling Crypto on the same day or few days.

Note that you will win a few days in short-term trading (a.k.a. Day Trading), and you will lose a few days.  Stop-loss is one of the best risk management strategies to ensure that you do not end up losing a large part.

However, if you come from a stock trading background, specific stop-loss logic will not apply to crypto trading due to high volatility.

 Long Term Trading

Long-term trading can also be considered as an investment in crypto. There is a term HODL. It means “hold our dear life”. After purchasing a cryptocurrency like bitcoin, you keep it for a long time (years) and then sell it for a significant profit.

It is recommended for those who believe that special cryptocurrency such as Bitcoin, Ethereum and others are going to the moon, and their investment will increase by leaps and bounds.

Long-term trading has its advantages, you are immune to short-term volatility, and you don’t have to follow the trading charts regularly.

Instead, you can simply look at the basics to plan your trading strategy.  It is suitable only for some blue-chip coins such as Bitcoin, Ethereum, Binance Coin.

What is Needed to start cryptocurrency trade?

To get started, you will need the below things:

  1. Funds:

There are two main ways to fund

the crypto trading account:

Bitcoin (Fiat like USD {USDT}, GBP {GBP}, SGD {SGT}, INR {INR})

The basic idea here is to buy bitcoins from your local exchanges and transfer bitcoins to any of these crypto trading platforms.

You can set up several funds for crypto trading.  As shared by many intelligent crypto traders, you should only invest money that is okay to lose.

  1. A cryptocurrency trading website:

You need a crypto exchange that provides high liquidity and sophisticated tools for crypto trading.  Since you need to purchase bitcoin or other cryptos, to begin with, you should provide an option to purchase crypto from Fiat.

  1. Technical analysis:

Now, this is a skill that you can develop as you move forward in crypto trading.  However, having a basic understanding of how to view charts, technical indicators such as RSI, MACD, Bollinger Bands will help you a lot in the coming days.

It takes very little time to understand charting and technical indicators, and with regular practice, you can hone your skills.

Most of these business websites provide integrated technical analysis charts.  You can also use something like TradingView to check TA charts.

  1. Risk Management:

This is one thing that I highly recommend you learn immediately.  Many smart people lose all their money in trading because they become overconfident by not following the basic risk management principle.

Remember, you will not win all the trades you make, and with proper risk management, you will reduce your losses.

Note for advanced users: If you come from a traditional stock trading background, you may be surprised by the wild swing of crypto price movements.

So traditional hourly or daily resistance and support levels may not be right here.  This is one reason I highly recommend you try paper trading before applying for real money.

  1. Paper Trading:

A good option before using real money in crypto trading is to use paper trading.  In this, you practice crypto trading before putting your real money.

This way, you can always check your trading skills before investing your hard-earned money.

Conclusion

Trading or Investing in cryptocurrency is possible in different ways. For example, many brokers offer CFD trading as a possibility. Investors can also invest in bitcoin stocks or bitcoin futures in the stock market.

On the other hand, those who wish to acquire digital currency units physically will find suitable providers in the form of crypto exchanges or crypto marketplaces. For the purchase or sale of coins, however, a wallet is required.

The hype surrounding Bitcoin and Altcoins has been unbroken for a few months, although there are always steeply falling values.

Nevertheless, more and more investors are interested in these alternative investments, as they often offer a higher return opportunity (as compared to a call money account, for example). However, not all investment types are equally suitable for all investor types.

For example, merchants who want to remain flexible and do not require digital currency may contract for differentials on bitcoin and the company.

For example, the Bitcoin Group SE share is suitable for investors pursuing long-term investment objectives.  Direct purchase of digital currencies is also popular.  Bitcoin, in particular, is increasingly used as a means of payment.

Crypto exchanges or marketplaces are available for direct acquisition or sale.

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